Mitsui Reached Agreement with Total E&P Italia
OREANDA-NEWS. Mitsui & Co., Ltd. has reached an agreement with Total E&P Italia S.p.A, a group company of Total S.A, to acquire Total E&P Energia Italia S.r.l which owns a 25% participating interest in the Tempa Rossa onshore oil field in the Gorgoglione concession in Italy through its newly established subsidiary Mitsui E&P Italia A S.r.l ("MEPIT").
The sale and purchase agreement was signed on March 18, 2013. The transaction will be completed after fulfilling certain conditions, including the approval of the Italian government. Total will remain as operator with a 50% participating interest.
Tempa Rossa is an onshore oil field located in the Potenza province of Italy's southern state Basilicata. Its original oil in place is estimated to range between 6 to 10 billion barrels, which makes it the largest proved and undeveloped onshore oil field in Western Europe. The oil storage layer to be developed is one of the thickest in the world, comprising about 2,000m. To date, six exploratory wells have been drilled, followed by long-term production tests, which all confirmed good level of productivity. Total has been the operator of this concession since 2002. In July 2012, it has declared a final investment decision together with its partner Royal Dutch Shell plc ("Shell") and development work has been commenced.
The total development costs of the concession (100% of the project) are estimated to be approximately 1.6 billion Euros (approx. 200 billion Yen, including sunk cost). Production of crude oil and LPG is planned to commence in 2016. In addition to a lump sum consideration, MEPIT will bear its share of the development costs based on its participating interest incurred after the Effective Date. The recoverable reserves of the entire project are estimated to be approximately 440 million barrels of oil equivalent, with an estimated peak daily production rate of approximately 50,000 barrels of crude oil and approximately 240 metric tons of LPG. MEPIT's corresponding share is anticipated to be recoverable reserves of approximately 110 million barrels of oil equivalent, and production of approximately 13,000 barrels of oil equivalent per day at peak production.